Monday, October 26, 2026
This is by far the longest period of prosperity in U.S. history – over 17 years.
There hasn’t been a real downturn or credit default cycle since the global financial crisis and recession that ended in 2009. And it’s still happening – earnings from the S&P 500 index companies are soaring:
It will likely continue in the short run. Per-share earnings are projected to rise by a stunning 34% this year.
As for employment, job creation is decent. The unemployment rate dropped to 4.1% from 4.5% last November and well below the long-term average of 5.7%. It’s been below 5% for five full years, the longest stretch in 50 years.
So, it’s not surprising that stocks have done so well. The S&P 500 has risen 315% over the past decade, or 15.3% compounded annually.
The party will go on, right?
I’m not so sure.
The AI infrastructure boom is driving earnings performance and economic growth. It’s so concentrated that we’re entering bubble territory.
Also, stock valuations are at or near all-time highs. The CAPE Ratio, a measure of earnings adjusted for economic cycles, is at 41 today. Its all-time high is 44.
If you look at the S&P 500’s price-to-sales ratio, it’s currently 3.78 times. That’s more than double the average over the past 25 years.
And the Buffett indicator, the ratio of the stock market’s total value divided by U.S. economic output, is at an all-time high. Meanwhile, the S&P 500’s dividend yield of 1.06% is at an all-time low.
So, this is all unprecedented. The signs indicate something will happen soon.
Daniel A. White is an investment advisory representative of and provides advisory services through CoreCap Advisors, LLC. Daniel A. White & Associates and CoreCap Advisors are separate and unaffiliated entities.